HP CEO Whitman Earned $15 Million in 2012, Filing Shows

Hewlett-Packard’s preliminary proxy form was filed today with the U.S. Securities and Exchange Commission and there’s a few interesting highlights.

The filing shows that CEO Meg Whitman earned more than $15.3 million during 2012, even though her base salary was only $1. The majority of her pay came in the form of share and options grants worth more than $13 million, almost none of which are yet vested. She also earned a $1.7 million bonus under HP’s PfR or “Pay for Results” bonus plan.

Under that plan, bonuses are awarded based on performance metrics including revenue, free-cash flow and achievement of management by objective (MBO) goals. There was also $220,000 in miscellaneous income, most of which had to do with her use of HP’s aircraft.

CFO Cathie Lesjak earned $6.7 million, which included her base salary of $825,011 per year plus $978,000 worth of stock options that vested during the year, plus $519,000 under the PfR bonus plan. She received another $4.8 million in combined share grants and options. The combined package is smaller than the $10 million she earned in salary, bonuses and options awards in 2010.

Enterprise business head Dave Donatelli earned the same base salary as Lesjak, but also received $1.15 million worth of stock options that vested during the year, plus another $519,000 under the PfR bonus plan and nearly $6 million worth of share grants and options.

John Hinshaw, the EVP who joined HP from Boeing in 2011, earned a combined $8.2 million in 2012, including $5.1 million in share grants and options. He has recently been tasked with cutting $3.5 billion out of HP’s annual operating budget by the end of 2014.

Todd Bradley, head of the Printing and Personal Systems Group, earned $7.4 million including $2.7 million in share grants and options. His base salary was $850,000 and he earned a PfR bonus of $587,000.

The filing also shows what two exiting execs were paid on their way out the door. Former head of the printing unit Vyomesh “VJ” Joshi, pushed out in a significant shakeup in March, collected $1.6 million in severance. He is also receiving about $3.3 million in four equal cash installment payments that end in October of 2013. He left HP owning 1.4 million shares worth, more than $22 million as of Friday’s closing price.

Another former executive collecting severance pay is John Visentin. He is the former head of Enterprise services, named by former CEO Léo Apotheker. He was fired after HP took an $8 billion charge to write down the value of EDS. That unit, acquired under former CEO Mark Hurd for $13.9 billion in 2008, has been a bit of an albatross around HP’s neck of late. Last year the unit was implicated in an embarrassing foul-up with an Australian bank that required Whitman to fly to Australia.

Visentin was paid a combined $8.3 million, including a base salary of $800,000 and a $2 million bonus connected to his promotion to Executive Vice President. HP also reimbursed him $127,311 for the deposit he made on a house he sought to buy in California, but on which he never closed. He lost out on $3.8 million in combined share grants and options, which were canceled and did not vest when he left. He departed HP owning a little more than 20,000 shares, worth about $330,000.

There are other interesting tidbits in the filing. For one thing, there’s a new policy proposal being put to shareholders that allows any person or group of up to 20 people who own at least 3 percent of HP shares and who has owned them for at least three years to nominate a slate of directors of as much as 20 percent of the board.

The proposal, which requires a vote of two-thirds of all shareholders, is a victory for activist investors over proxy access. Previously, HP shareholders could only vote on the slate of directors nominated by the company. Now if enough shareholders are unhappy, they can nominate their own group of new directors.

It has been a long-simmering controversy in corporate governance circles. Proponents have argued proxy access improves returns to shareholders by forcing boards to be more responsive to them, lest they lose their seats. Without proxy access, investors who want to shake up a board’s membership have been forced to wage expensive public campaigns to sway the votes of shareholders and have had to pay for distributing their own ballots.

As of now, there are only three investors who own enough to meet the 3 percent standard, and they’re all institutional shareholders: Investment firm Dodge and Cox owns 6 percent of HP’s outstanding shares, State Street Corp. owns 5.4 percent and investment firm Blackrock owns 5.2 percent.

HP’s fourth-largest investor, who owns 1.8 percent, already has a seat on the board. Ralph Whitworth, the activist investor with a history of agitating for breaking up the companies he invests in, joined HP’s board in November of 2011. And all indications are that he’s supportive of Whitman and her plans to turn HP around over the next few years. Besides, any board shakeups he may wish to carry out will have to wait for awhile: He doesn’t yet own 3 percent.

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